Deloitte Consulting, PwC / Strategy& and EY Advisory are the largest consulting firms of the globe, reveals new research by Gartner. The Big Four accounting and consulting giants together hold 40% of the market, with the top 200 firms globally distributing nearly 80% of the $125 billion advisory market.
Every year Gartner, a global analyst firm, conducts research in the state of the consulting industry. Its latest edition of the so-called ‘Market Share Analysis: Consulting Services’ looks into the development of the consulting market, as well as the market shares of the most important players in the landscape*.
The analysts find that globally spending on management consultants has grown to $125.2 billion in 2014, up 6.1% from $118.1 billion in 2013**. The top four largest consulting firms, all with a heritage in the accountancy sector, known as the Big Four (Deloitte, PwC, EY and KPMG), hold a combined 40% of the total consulting market. Compared to a decade ago the Big Four firms have significantly increased their market share, through organic growth and dozens of acquisitions. The top 10 consultancies account for 52% of the market, while down the line the top 200 service providers with consulting services hold 79% market share, suggesting a non-fragmented and consolidating market according to the analysts.
Deloitte Consulting ranks for the fourth year in a row as the largest consulting firm of the globe. Deloitte's top position is the result of two key reasons: it is the only one of the Big Four that did not divest its consulting practice between 2000 and 2002, in addition Deloitte can build on the broadest palette of advisory services compared with its peers, in particular when it comes down to implementation services***. PwC has gained major terrain through the acquisition of Booz & Company last year for a reported $1 billion fee, the strategy & operations consultancy now rebranded as Strategy&. EY's robust consulting growth was a combination of organic and inorganic growth. It has also fortified its resources, repositioned its strategy approach and eradicated challenges that membership firms typically face when ramping up global and regional resources.
KPMG maintains its fourth position. In 2014, KPMG's consulting service revenue was $10.7 billion, up 5.2% compared to 2013 ($10.2 billion). Its consulting strengths lie mainly in its business consulting services, although KPMG Capital has helped focus the firm in directing its investments into focused solutions, such as security, risk, and data and analytics.
Accenture moves up one position to fifth. Accenture's consulting profile has according to Gartner a balanced mix of a business and technology consulting service portfolio, with its key strength in the “cohesive approach” it maintains when selling to its clients. The analysts also highlight Accenture’s successful strategy in building a high-end advisory practice, known as Accenture Strategy, to complement its Digital, Technology and Outsourcing units.
IBM drops one position to sixth, driven by sluggish or even negative growth across all service segments. IBM's consulting revenue (IBM GBS) was $3.99 billion in 2014 and $3.91 billion in 2013, its consultancy profile however leans heavily toward technology consulting.
McKinsey & Company – the globe’s largest strategy consultancy – retains the number 7 position in management consulting services. The firm's business is predominantly in the corporate and business consulting service arena, although it has in recent successfully adapted its model to include many new service lines in the technology space, such as McKinsey Advanced Data & Analytics, McKinsey Digital, McKinsey Implementation, McKinsey Recovery & Transformation Services and McKinsey Solutions.
Also Booz Allen maintains its position, realising the overlarge majority of its $2.0 billion revenue in North America, with some business in the Middle East, North Africa and off late in Asia. A large part of its clientele is in the U.S. federal government space – Gartner estimates that 98% of its consulting revenue is from the government sector. The negative growth rate of 2.9% is the consequence of cutback spending from the U.S. government sector.
CGI moves into ninth position, with a consulting growth rate of 3.4%. The acquisition of European-based Logica in 2012 has played a major part in driving its global consulting revenue to its $1.5 billion. CGI is according to the analysts making strong inroads for digital business and the Internet of Things, while clearly understanding that security concerns need to be at the forefront.
The top 10 is concluded by CSC, which drops from ninth last year. The consultancy has a stronger lean toward technology consulting services, and can build on a “relatively sound” consulting business in the operations area. CSC's consulting service revenue was $1.41 billion for 2014 and $1.46 billion in 2013, with a slowed growth rate for 2014 of -3.6%.
Going forward Gartner highlights that business models of consulting firms will continue to change as consultants stretch to redefine, reposition and differentiate their go-to-market approaches, capabilities and skills, and embrace new strategies to compete in the new world of digital. “A consulting firm's appetite for change, whether they are ready or not, has to be ravenous; otherwise, they will lose revenue and be out of the consulting game faster than expected. The need for a faster speed to change is no longer an option”, conclude the analysts.
* For the analysis Gartner assessed the revenue in the area of business consulting and technology consulting services. The total revenue of firms can be (significantly) higher. In addition, Gartner's analysis highlights a select number of vendors. For example, with a total revenue of roughly $4 billion BCG would qualify for the ranking, the Boston-based strategy and management consultancy was however not part of Gartner's scope.
** Note that analyst firms have different definitions for assessing the size and value of the consulting market. For example Source estimates the global consulting market to be worth just over $100 billion, while Kennedy believes the market is worth more than $230 billion. See the page Global Consulting Market for details.
*** EY sold its consulting practice to Capgemini, PwC Consulting was divested to IBM while KPMG Consulting continued as BearingPoint. The consulting practice of the fifth major accounting network at the time, Arthur Andersen, was following independence rebranded as Accenture.